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The Kansas City Beacon
The Royals want your tax dollars for a new stadium. What to know before the April 2 vote
By Josh Merchant,
2024-02-22
Editor’s note (Feb. 23, 2024): This story was updated to reflect the position of the community coalition advocating for a community benefits agreement.
Upward of $1.7 billion taxpayer dollars are on the line this April.
After years of planning and negotiations, the Kansas City Royals want to demolish six blocks of the Crossroads district to make way for a shiny new baseball stadium.
But first, they will need voters to agree to tax themselves for four decades to subsidize the Royals and the Kansas City Chiefs.
Jackson County voters will see a lengthy item on the April 2 ballot asking to repeal and replace a sales tax that would otherwise evaporate in 2031. Essentially, passage would use the 3/8-cents sales tax revenue for a new Royals stadium and improvements for Arrowhead Stadium.
The ballot item comes amid behind-the-scenes negotiations between the teams, Jackson County and a coalition of community groups including the Missouri Workers Center and the labor union representing current stadium workers.
The Royals have not yet approved a community benefits agreement or a lease agreement with the county. The community coalition likely will not back the ballot measure until the community benefits agreement is finalized, and they say the Royals have not yet earned a “yes” vote.
To answer your most pressing questions, The Beacon spoke with Jackson County Legislators Sean Smith and Manny Abarca, who have been involved in some of these negotiations.
Shall the County of Jackson repeal its countywide capital improvements sales tax of three-eighths of one percent (3/8%) authorized by Section 67.700 of the Revised Statutes of Missouri and impose as a parks sales tax of three eighths of one percent (3/8%) authorized by Section 644.032 of the Revised Statutes of Missouri for a period of 40 years, to provide funding for park improvements, consisting of (1) site preparation and clearance, developing, constructing, furnishing, improving, equipping, repairing, maintaining, and operating both Arrowhead Stadium and its surrounds, and a new baseball stadium and its surrounds, to retain the Kansas City Chiefs in Jackson County, Missouri and the Kansas City Royals in Kansas City, Jackson County, Missouri pursuant to long term leases; and (2) refinancing debt obligations previously incurred to finance or refinance improvements to the Harry S Truman Sports Complex?
A 3/8-cent sales tax in Jackson County already funds maintenance and repairs for Arrowhead and Kauffman stadiums. Because the sales tax is earmarked for the Truman Sports Complex, the Royals cannot use these funds for the team’s downtown stadium plans.
A “yes” vote would repeal the existing sales tax, set to expire in 2031, and replace it with a new sales tax that is not restricted to the Truman Sports Complex. The money would be used to repair Arrowhead Stadium and to construct and maintain the new downtown stadium. It also extends the tax until 2064.
A “no” vote will continue funding Truman Sports Complex — which includes Arrowhead Stadium and Kauffman Stadium — using the existing 3/8-cent sales tax until 2031.
The Jackson County Legislature will need to take action after the April election to actually authorize the tax, and its decision may be informed by the yet-to-be-negotiated lease agreements and community benefits agreement. If there’s no deal, the Legislature could still vote not to authorize the sales tax.
The sales tax is expected to generate $54 million per year, which would be split between the Chiefs and the Royals.
To cover upfront expenses for the construction of the new stadium, Jackson County could take out a loan that would be paid off using the sales tax revenue.
Before the Chiefs or the Royals can use it, the money must first pay off debt obligations. That could include stadium construction if the county finances it through a loan.
After that, the Chiefs and Royals would submit expenses to the JCSCA for reimbursement.
“The Sports Complex Authority is kind of like your staff accountant, making sure you submit your receipts for your expense report,” said Smith, the county legislator.
The $54 million a year generated by this sales tax can be used for demolition in the Crossroads, construction and furnishing, maintenance, repairs and operations at Arrowhead Stadium and the new baseball stadium and the hotels, offices and other Royals-controlled development around the new ballpark.
The lease agreements with the teams should eventually narrow this down to a more limited set of uses, but the teams have not yet agreed to a lease with the county.
“The ballot language is so nebulous that it can be spent on whatever is deemed appropriate by lease,” Abarca said. “It could include components of the community benefits agreement, beautification around the stadium, infrastructure, that kind of thing.”
Have the Royals proved that they need this money?
In short, no.
For development projects like apartments receiving a tax break, Kansas City agencies are required to complete a third-party “but-for” analysis.
For that kind of study, an independent financial expert looks at a project’s cost to calculate how much of a tax incentive is needed for a project to be financially practical. In other words, “but for” the incentive, the project would not be possible.
That kind of analysis has not been conducted for the Royals stadium. The new stadium may or may not be possible without the sales tax revenue — we simply don’t know, because the Royals have not made the financial details of the project public.
How much would this tax cost me per year?
The sales tax is expected to generate $54 million per year. That’s more than Kansas City spends on bus service every year; a similar 3/8-cent sales tax that voters renewed last year generates around $40 million per year for the transit agency.
The transit sales tax generates less revenue because it only applies to Kansas City purchases, whereas the stadium tax would apply countywide.
This works out to about $115 per Jackson County adult every year, according to an analysis of Federal Reserve Bank data conducted by the Show-Me Institute, a libertarian think tank.
Sales taxes disproportionately hit lower-income households.
Have the Chiefs and Royals made a binding commitment to stay in KC if the ballot measure passes?
They have made a commitment, but it is not legally binding.
The Chiefs and Royals signed a letter of intent that contains a commitment to stay in Jackson County if the ballot measure passes. It is referred to as a “nonbinding understanding.”
The Chiefs committed to stay at least 25 years at Arrowhead Stadium, and the Royals committed to stay for 40 years at the proposed downtown ballpark.
What happens if the Royals stop making money and go under?
In that case, Jackson County would likely be left with debt obligations on the stadium and would need to continue to make payments using the sales tax revenue.
“If baseball just goes bankrupt, then we could be left holding the bag,” Smith said.
The other possibility is that the teams could voluntarily leave Kansas City, although that is less likely given their written commitment. In that case, the county Legislature could vote to repeal the 3/8-cent sales tax, so long as the debt is paid off.
How does this compare to how the existing sports complex was funded?
When construction began on the Truman Sports Complex in the late 1960s, taxpayers contributed $102 million . Adjusted for inflation, this is about $950 million — for both stadiums.
In 2006, voters approved a sales tax that paid for renovations to the Truman Sports Complex for 25 years. By the time the current sales tax expires in 2031, Jackson County taxpayers will have contributed another $850 million.
What would happen if voters reject this ballot measure? Could it go to a vote a second time?
Abarca said he’s been told by the Royals that they would put negotiations on pause for the rest of the year if this measure fails.
The Chiefs and Royals have seven years left on their leases — and a new stadium takes around five years to build.
The Royals would have to start thinking about a contingency plan — which could mean they stay at Kauffman Stadium. Or they could leave Kansas City.
Is there a scenario where this money goes toward a stadium not in the Crossroads?
Probably not.
The ballot measure is not legally bound to the Crossroads location, but if it passes, the Royals will likely take it as voter approval of the Crossroads plan.
If this measure fails, the Royals may try again at the Crossroads location, or they may decide to change locations.
The proposed stadium would replace an old printing pavilion formerly used by The Kansas City Star. (Scott Canon/The Beacon)
Who would own the land?
The Royals would purchase the land for the stadium in the Crossroads, then sell it to the county for a nominal price.
Jackson County would then lease the land to the Royals for 40 years.
The six city blocks for the stadium are worth $9.3 million in taxable value. If a stadium is constructed, these properties would become tax-exempt under county ownership.
It is unclear if the Royals would make payments in lieu of taxes on this land — as is the case with some other development deals. This is another detail that will be worked out in the lease agreement, which is yet to be finalized.
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